The Price Is Wrong: New Report Calls for Fossil Fuel Prices that Reflect Environmental Costs

Energy prices around the world are too low — far too low. That’s the big message from a new report from the International Monetary Fund (IMF), Getting Energy Prices Right: From Principle to Practice , launched today at an event at the Center for Global Development . The report argues that the costs of coal, natural gas, gasoline, and diesel fail to account for these fuels’ environmental and social impacts—such as greenhouse gas emissions, air pollution, and traffic deaths. Setting prices that reflect these side effects — through taxes, licensing, or cap-and-trade systems — could reduce deaths from fossil fuel-related air pollution by 63 percent, decrease global carbon dioxide emissions by 23 percent, and generate revenues totaling about 2.6 percent of global GDP. “It’s bad for an economy to be downgraded, but it’s even worse for it to be degraded,” said Christine Lagarde, ...